Author Topic: Better to stay away  (Read 1783 times)

Cardboard

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Better to stay away
« on: April 12, 2019, 07:46:38 AM »
Almost every time I have heard or read these words in investing, it was a pretty solid signal to stay away. At best, dead money for a while and we only have one life to live.

"...told shareholders to be patient and ignore the short-term stock market fluctuations and focus on the long-term performance."

https://www.stockwatch.com/News/Item.aspx?bid=Z-C%3aFFH-2743339&symbol=FFH&region=C

Nothing wrong with planning for the long term but, you have to deliver also in the short term. People need to be held accountable to both short and long term deliverables. If not, it is just an excuse that can be repeated ad infinitum.

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SmallCap

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Re: Better to stay away
« Reply #1 on: April 12, 2019, 09:57:05 AM »
I'm remembering Jeff Bezo's shareholder letters from the 90s telling shareholders to not expect profitability for many years to come because he was building something bigger.

Also I was a casual Chicago Cubs fan until the day they hired Theo Epstein and he laid out his long term plan to really suck in the short term and trade away most of their good players for prospects all building towards creating a World Champion. He told all the fans to expect to lose a lot and not enjoy the team in the short term because he was building a world championship team not trying to make that years team a little better.

In both those cases, they had a plan, a bold audacious plan. I'm not sure that FFC has such a plan or maybe I just haven't seen it.
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Spekulatius

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Re: Better to stay away
« Reply #2 on: April 12, 2019, 11:31:33 AM »
It’s the long term Performance of a lot of his investments that I am worried about. That’s why I hold less FFH “bags” now than I used to.
To be a realist, one has to believe in miracles.

Viking

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Re: Better to stay away
« Reply #3 on: April 12, 2019, 01:54:15 PM »
Almost every time I have heard or read these words in investing, it was a pretty solid signal to stay away. At best, dead money for a while and we only have one life to live.

"...told shareholders to be patient and ignore the short-term stock market fluctuations and focus on the long-term performance."

https://www.stockwatch.com/News/Item.aspx?bid=Z-C%3aFFH-2743339&symbol=FFH&region=C

Nothing wrong with planning for the long term but, you have to deliver also in the short term. People need to be held accountable to both short and long term deliverables. If not, it is just an excuse that can be repeated ad infinitum.

Cardboard

My view is 5 years is a solid time frame for shareholders to evaluate management (and i do not view this time frame as ‘short term’).

I also question the usefulness of including FFH returns from their first 10 years of existence given how different the company is (much larger) and all the changes with the people working at the company and with the economy (10 year bond yields at 2.5% and stocks trading at high end of historical PE multiple etc). Yes, Prem hit the ball out of the park back then but its usefulness in helping investors understand where FFH is going over the next 5 years is minimal from my perspective.

My view is FFH keeps on buying textile mill type investments year after year. They do not seem to be learning and adjusting their investment style over time. Over many years Buffett learned and slowly adjusted his investing style in a way that was fairly predictable for investors. I have little ability to explain what FFH is doing with its investments and little confidence that FFH will do well moving forward.

As i have said before, i do like what FFH has done in building out its insurance businesses and underwriting looks solid. In the past this was investors primary concern with investing in FFH. But unfortunately what they are doing on the investing side is now the primary problem.

I also get the feeling that there is some empire building going on at FFH with shareholders (and shareholder returns) being a lower priority. Prem seems focussed on building a company that will be here in 100 years. He does not seemed focussed on making decisions that will grow shareholder value over the next one, two or three years. So the company continues to get bigger and shareholders continue to earn poor returns. I wish Prem would focus more on growing book value (which would benefit shareholders) and focus less on getting bigger ‘and being here in 100 years’.

« Last Edit: April 12, 2019, 02:04:05 PM by Viking »

scorpioncapital

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Re: Better to stay away
« Reply #4 on: April 12, 2019, 02:15:30 PM »
These words are a distraction. Another company JEF, the management keeps saying the long term performance but they've underperformed for 15 years + now.

What matters is the nature of the business and the quality of the management - how well they 'get' the investment and business 'game'. A stubborn or unskilled manager can very easily delude themselves while pay lip service to 'value investing mantra'


Sharad

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Re: Better to stay away
« Reply #5 on: April 12, 2019, 03:19:39 PM »
I'm remembering Jeff Bezo's shareholder letters from the 90s telling shareholders to not expect profitability for many years to come because he was building something bigger.

Also I was a casual Chicago Cubs fan until the day they hired Theo Epstein and he laid out his long term plan to really suck in the short term and trade away most of their good players for prospects all building towards creating a World Champion. He told all the fans to expect to lose a lot and not enjoy the team in the short term because he was building a world championship team not trying to make that years team a little better.

In both those cases, they had a plan, a bold audacious plan. I'm not sure that FFC has such a plan or maybe I just haven't seen it.


I think you would enjoy the book, "Astroball", based on everything you discussed about Theo Epstein's m.o. with the Cubs.
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shalab

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Re: Better to stay away
« Reply #6 on: April 12, 2019, 05:35:56 PM »
Bang on regarding saving the empire for kids. This company is meant for his kids and their kids and grand kids. This is not about shareholders. I am surprised people spend a bunch of money to attend these meetings. It is the usual - unicorn and utopia story sells.

Almost every time I have heard or read these words in investing, it was a pretty solid signal to stay away. At best, dead money for a while and we only have one life to live.

"...told shareholders to be patient and ignore the short-term stock market fluctuations and focus on the long-term performance."

https://www.stockwatch.com/News/Item.aspx?bid=Z-C%3aFFH-2743339&symbol=FFH&region=C

Nothing wrong with planning for the long term but, you have to deliver also in the short term. People need to be held accountable to both short and long term deliverables. If not, it is just an excuse that can be repeated ad infinitum.

Cardboard

My view is 5 years is a solid time frame for shareholders to evaluate management (and i do not view this time frame as ‘short term’).

I also question the usefulness of including FFH returns from their first 10 years of existence given how different the company is (much larger) and all the changes with the people working at the company and with the economy (10 year bond yields at 2.5% and stocks trading at high end of historical PE multiple etc). Yes, Prem hit the ball out of the park back then but its usefulness in helping investors understand where FFH is going over the next 5 years is minimal from my perspective.

My view is FFH keeps on buying textile mill type investments year after year. They do not seem to be learning and adjusting their investment style over time. Over many years Buffett learned and slowly adjusted his investing style in a way that was fairly predictable for investors. I have little ability to explain what FFH is doing with its investments and little confidence that FFH will do well moving forward.

As i have said before, i do like what FFH has done in building out its insurance businesses and underwriting looks solid. In the past this was investors primary concern with investing in FFH. But unfortunately what they are doing on the investing side is now the primary problem.

I also get the feeling that there is some empire building going on at FFH with shareholders (and shareholder returns) being a lower priority. Prem seems focussed on building a company that will be here in 100 years. He does not seemed focussed on making decisions that will grow shareholder value over the next one, two or three years. So the company continues to get bigger and shareholders continue to earn poor returns. I wish Prem would focus more on growing book value (which would benefit shareholders) and focus less on getting bigger ‘and being here in 100 years’.

james22

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Re: Better to stay away
« Reply #7 on: April 12, 2019, 09:36:23 PM »
Bang on regarding saving the empire for kids. This company is meant for his kids and their kids and grand kids. This is not about shareholders.

Yeah, seems turning into Loews (run more for the benefit of the Tisch family than shareholders).
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